Like a scene from a Wild West movie, the Syrian town of El Quneitra is a ghost town. Razed by Israeli troops as they pulled out of the eastern strip of the Golan Heights in 1974, buildings lie flat like pancakes or pushed over into heaps of rubble. The Syrians say they have left it as they found it, to serve, according to Jamal Salem, a government spokesman based in the town, "as a living witness" of Israel's legacy on the Golan.

For 28 years, the Golan Heights has stood as a symbol of the intractable state of Arab-Israeli affairs. For Israel, the 1,260 square kilometers of land serve as a security buffer against its most bitter foe. For Syria, the Golan is a symbol of national pride, and peace without its total return is unthinkable. But hopes for a settlement have been buoyed by Israel's admission last month that the Golan is Syrian land and by Syria saying the two sides have agreed on a framework for security arrangements after an Israeli withdrawal. Direct talks will restart at the end of June in Washington.

Even the hint of progress with Syria--what one diplomat calls "the most cautious and consistent" of the Arab states negotiating with Israel--is welcome. Syria refuses to budge on the question of its right over all the Golan according to its pre-June, 1967 border. Regional analysts say pressure won't work with President Hafez al-Assad. "Syria would like a solution," says one observer in Damascus, "but it can probably also live without one."

While Syria can survive without peace, it won't thrive. The country has a stifling $16 billion foreign debt, mostly from Syrian arms purchases. Donations from Arab gulf states, which ran at $1 billion a year in the 1980s, have dried up. Foreign companies can't find lenders for investments in Syria, and Syrian attempts to renegotiate loans bilaterally with European creditors have met resistance. Syria has refused any World Bank or International Monetary Fund prescriptions for economic reform as an incentive for aid.

PSYCHIC WOUND. Still, Syria's economy could be worse. Gross domestic product growth last year was 8%, and the country has had two record agricultural years after good rains. Exports are growing at 10% a year, led by the private sector. The government is encouraging private investment in state enterprises and has loosened exchange rate controls. Yet state dominance remains. A proposed plant to build General Motors Corp. vehicles from kits in Aleppo is on hold after the regime demanded more say over repatriation of capital and hard-currency transfers. The kits will be exported by Michigan-based Intraco Corp., run by Syrian-American Nicola Antakli. Ali Ayoubi, a local partner of Antakli's, says he hopes the plant will be online by the end of the year. But a Western analyst in Damascus says it won't be running "any time soon."

In spite of its agricultural base, most observers say the Golan isn't economically important to Syria. "The loss of the Golan is a wound to the Syrian psyche," notes a diplomat in Damascus. "There is a sense of dismemberment."

That sense of separation is more than symbolic. Friday is family day in the Arab world, but for Syrians severed by a line of barbed wire on the Golan, visiting relatives has taken on a different ritual. Each week, dozens of families gather outside the occupied Syrian village of Majdel Shams at what has been called "the shouting fence." Under the watchful eyes of Syrian and Israeli soldiers, they come armed with picnic baskets and bullhorns, and they yell 400 meters across a valley covered in wild grass and dotted with fruit trees to find out the latest on births, weddings, and deaths in the family.

For Hassan Hamdani Yasuub, 28 years of separation have been hard. "It's sad," says the wizened 65-year-old farmer in the nearby Syrian village of Hadar. Like most of the Syrians separated by Golan occupation, he is Druze, an offshoot of Islam that dates back 1,000 years. He says he talks about once a month to relatives on the other side and clings to the dream of seeing nieces and nephews face-to-face: "We hope if there is peace, we will be able to visit freely." Quoting the Arab singer Farid Al-Atrash, Yasuub says he and his relatives live "close but so far." A long-awaited peace settlement may mean the yelling can stop.EDITED BY HARRY MAURER By Kirk Albrecht in El Quneitra